Marcus Agius quit his £750,000 Barclays role on 2 July last year. Photograph: Pierre Verdy/AFP/Getty Images

Marcus Agius is to remain on the Barclays payroll until March next year – 20 months after resigning as chairman of the troubled bank.

He quit his £750,000 role on 2 July 2012, just days after the bank was thrown into turmoil in the aftermath of its £290m fine for attempting to rig Libor. But he was forced into a U-turn the next day after regulators forced out Bob Diamond, the chief executive, instead.

Agius stayed until the end of October when he was replaced by Sir David Walker. The bank later revealed that he had been retained on a 12-month £175,000 consultancy contract to provide what was described as advisory support for the corporate banking arm.

In the annual report released in March the bank said this one-year arrangement would be reviewed "in light of business generated". He is now to remain with the bank until March 2014, with continued use of the bank's town house in the West End of London, intended for the bank's wealthiest clients.

It is not clear how much he will be paid for the remaining five months of his consultancy.

Agius was one of the best known investment bankers in the City – he spent 35 years with Lazards – when he was appointed to the board of Barclays in 2006, becoming chairman in January the following year.

His wife, Kate, is the daughter of Edmund de Rothschild, of the Rothschild banking family.

His tenure coincided with the 2007 credit crunch and the 2008 banking crisis, when the bank caused controversy by turning to Middle Eastern investors for a £7bn life-saving cash call instead of taking a taxpayer bailout.

Agius also had to tackle rebellions by shareholders over pay deals for Diamond, and the bank's pay policies.

His testimony to the Treasury select committee in the days after the Libor fine caused shockwaves: he revealed that on the day he announced his resignation he had been summoned by the then governor of the Bank of England, Lord King, to be told that Diamond no longer had the support of the regulator.

Many City sources believe that Agius resigned to try to protect Diamond after the bank had been caught out by the public and political reaction to the Libor fine.

Since then, regulators have levied bigger fines on Royal Bank of Scotland, UBS of Switzerland and the Dutch bank Rabobank for attempting to manipulate the key benchmark interest rate, while the money broker Icap has also been fined.

Other firms remain under investigation by the Financial Conduct Authority and there have been reports that EU competition authorities are preparing to fine a number of banks, including Barclays, for rigging other benchmark rates.

Barclays, now run by Antony Jenkins who was promoted after Diamond left, admitted last week it is now co-operating with regulators on a new investigation into whether the £3tn-a-day currency markets have been manipulated.

The investigation is at an early stage, although some in the City believe that it could eventually be on the same scale as the Libor-rigging scandal.